Harbor Energy Ltd. made a final sweetened offer of $ 10.9 billion for Santos Ltd., claiming support from the major shareholders of the Australian oil and gas producer.
Harbor, based in the USA UU., Improved its offer by 4.6 percent and indicated that it could rise Also, if Santos expanded its oil coverage program, the Australian company said in a statement on Monday. At $ 5.21 per share, or the equivalent of A $ 6.95, it is an 11 percent premium at the close of Friday.
Santos continues to operate below the offer. Shares in Sydney rose 3.4 percent to A $ 6.46 after the offer was revealed, then reduced those gains after Harbor's announcement that it was "better and final", with an increase of 1.7 percent at 1:50 pm local time. The benchmark S & P / ASX 200 index changed little.
The Harbor acquisition campaign has received criticism that it has not represented the increase of approximately 12 percent in the future of Brent crude since the original offer on March 29. In addition, there are concerns that the review of foreign investment can sink any agreement as Australia's struggle to ensure sufficient supply of natural gas has increased the sensitivity over the control of domestic producers.
"We still have uncertainty about the oil price environment," Adrian Prendergast, an analyst at Morgans Financial Ltd., said by telephone. "Given that uncertainty, we believe it is a really good offer."
The share is priced below the offer in large part because it is not clear how the Santos board sees the proposal, and any agreement needs foreign investment. the approval in Australia, he said.
The revised offer is conditioned on Santos making additional coverage of oil-linked production in 2018 of around 30 percent and changes to coverage in 2019, according to Santos' statement. Harbor could increase the offer to $ 5.25 per share if Santos agrees to cover 30 percent of oil-linked production by 2020, according to statements from both companies. Normally, producers use hedging programs to ensure future sales through derivatives linked to the price of oil.
The requirement to hedge oil production will allow Harbor to reduce transaction costs and increase the price of the offer, Harbor said in his statement, adding that it is not required to support its financing. The offer also has the backing of ENN Group and Hony Capital, he said. Chinese companies have a combined of 15.1 percent of Santos.
& Substantially more & # 39;
Harbor last week offered $ 4.98 per share for Santos – its offer unchanged after five weeks of due diligence – which led to the goal to close 1.9 percent in Sydney on Thursday. Santos told investors earlier this month that it could be "substantially more" than Harbor's original proposal due to a rise in oil prices.
Harbor executive director Linda Cook has said she will seek to expand Australia's third largest energy producer in Asia and Africa. It would also seek to increase its gas assets in Cooper Basin in southern Australia, the Darwin LNG plant operated by ConocoPhillips in the Northern Territory and in Papua New Guinea.
– With the help of Ed Johnson